L'Oreal is the 1st cosmetic group worldwide with over a century of expertise. It has diversified through acquisitions like The Body Shop and Galderma Laboratories. L'Oreal pursues acquisitions to strengthen its portfolio, satisfy local needs, and quickly acquire new resources. It implements a risk mitigation strategy including increasing patents and R&D expenditures. L'Oreal's most recent acquisition was Pacific Bioscience Laboratories in 2011 for its expertise in sonic skin care devices.

2. Key Facts and Figures
1st cosmetic group worldwide
1 century of expertise in cosmetics
23 international brands
19.5 billion euros of sales in 2010
130 countries
66,600 employees
612 patents registered in 2010

3. DIVERSIFICATION STRATEGY
“Closely-related” Dermatology
Entering three kinds of industry:
Cosmetics
The Body Shop

4. COSMETICS INDUSTRY
Offering different product lines through four market lines:
Professional Products

5. COSMETICS INDUSTRY
Consumer Products

6. COSMETICS INDUSTRY
Luxury Products

7. COSMETICS INDUSTRY
Active Cosmetics

8. THE BODY SHOP
A chain of cosmetic stores
specializing exclusively in
hair and skin care products
based on natural
ingredients.
Operated a total of 2,550
stores in 62 countries
worldwide by the end of
2009.

9. DERMATOLOGY
Galderma Laboratories: a
joint venture with Nestle. It
boasts three of the top 25
best-selling drugs.
It specializes in skin
diseases and skin
infections.

10. REASONS OF DIVERSIFICATION
1 Part of L’Oreal Long Term
Strategy
2 Exploiting Relevant
Economies of Scope
Strengthening External Growth
3 Meet Consumer Needs

11. STRATEGIC CHOICE
Internal External
Growth Growth
Resources Diversification
(M & A)
Asset
Alliances

12. GROWTH STRATEGY
“Merger and Acquisition”
Objectives:
Reaching a critical size for exploiting
economies of scale.
Satisfying local needs.
Creating a portfolio of distinctive but
complementary products and brands.
Quickly acquiring new resources and
technologies.
Overcoming the entry barriers.

13. CHARACTERISTICS OF COMPANIES ACQUIRED
Operating in different geographical markets from those in
which L’oreal is already operating.
The Body Shop: Enters India Easily
Offering products that complete the L’oreal portfolio
brands or products.
ROGER&GALLET: Produces Pharmacy Fragrance

14. CHARACTERISTICS OF COMPANIES ACQUIRED
Operating in geographical markets in which L’oreal intends to
reach leadership position.
Inneov: Number 1 in Spain
Having high technology and competences related with
L’oreal products.
Vichy: Advanced Skincare Technology

15. ACQUISITION PREPARATION FLOWCHART
Preparation
(Gather
information)
Decision
Similarities
(Implementation)
with L’oreal
Characteristics
Final What is the
Preparation Objectives?

16. IMPLEMENTATION
L’Oreal has acquired more than 25 brands with different
market segments (see acquisition timeline).
Each brands contributes a different advantage for
L’Oreal long term strategies.
The Body Shop makes L’Oreal distribution broader.

17. ACQUISITION TIMELINE
1990 1995 2000 2005 2010
Professional
Products
Consumer
Products
Luxury
Products
Active
Cosmetics
The Body
Shop

18. RISK MITIGATION STRATEGY
Increasing patent rights on its inventions.
Innovation and Patent
Rebuild the products to get customers’
attention.
Patents, R&D Expenditures and Employees at L’Oreal
2001 2003 2005 2007 2009
Registered 493 515 529 576 674
patents
R&D 432 480 496 560 609
expenditures
(mill. Euros)
R&D employees 2,743 2,921 2,903 3,095 3,313

19. MARKETING MITIGATION
Market different product with different target market.
Develop a clear positioning statement as a current market leader.

20. MARKETING MITIGATION
Try to be the first mover – to gain more market share before other.

21. PRODUCTS STRATEGY
Collaboration with Channel Partners
Licensee
Hair Salons Mass Market
Retail Partners
Market Research Agencies
Department
Pharmacies,
Stores,
Dermatologists
Perfumeries

22. ‘ALIGNING WITH NATURE’ STRATEGY
Commitment to -50%
Sustainable Development: GREENHOUSE
GAS EMISSION
Reducing impact on natural capital.
Target for 2015
Responsible sourcing. -50%
Eco-designing new ingredients. WASTE
GENERATED PER
Addressing controversy on ingredients. FINISHED
PRODUCT
Protecting the global system. Target for 2015
-50%
WATER
CONSUMPTION
PER FINISHED
Biomethanisation Unit at Libramont Plant: PRODUCT
100% Green Energy

23. NEWEST ACQUISITION:
PACIFIC BIOSCIENCE LABORATORIES
Date of Acquisition: Dec
15th , 2011.
Intermediated by L’Oreal USA (the
franchisee).
Products: Sonic Skin Care Devices
(Patented).
Channels: Dermatologists and
Prestige Retail.
Main Market: US.
Reasons behind Acquisition:
Pacific Bioscience Laboratories’
Expertise in Devices.

24. QUESTIONS?
Thank You for Your Attention